User-assigned group policy installation fails at logon

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My package installs fine interactively. And also, using Group Policy,
It works fine if I install from 'Add New Program'.

But it fails, if I select option "install at logon".

During logon, "Installing managed software 'product name'..." is
displayed for sometime.

AppMgmt.log contains the following error entry:

"The install of application 'product name' from policy 'policy name'
failed. The error was : %1603"

And the event-log has the following entries:

Event Type: Error
Event Source: MsiInstaller
Event Category: None
Event ID: 11719
Date: 10/8/2007
Time: 12:04:44 PM
User: SDG\gmurad
Computer: WIN2K3-MUF-2140
Description:
Product: 'Client' -- Error 1719. The Windows Installer Service could
not be accessed. This can occur if you are running Windows in safe
mode, or if the Windows Installer is not correctly installed. Contact
your support personnel for assistance.

For more information, see Help and Support Center at
http://go.microsoft.com/fwlink/events.asp.
Data:
0000: 7b 46 44 45 37 33 31 46 {FDE731F
0008: 39 2d 44 32 33 35 2d 34 9-D235-4
0010: 35 32 35 2d 39 35 33 31 525-9531
0018: 2d 39 45 36 35 33 33 32 -9E65332
0020: 44 43 38 46 39 7d DC8F9}


Event Type: Error
Event Source: Application Management
Event Category: None
Event ID: 102
Date: 10/8/2007
Time: 12:04:44 PM
User: SDG\gmurad
Computer: WIN2K3-MUF-2140
Description:
The install of application 'Client' from policy Client-policy failed.
The error was : Fatal error during installation.

For more information, see Help and Support Center at
http://go.microsoft.com/fwlink/events.asp.


Event Type: Error
Event Source: Application Management
Event Category: None
Event ID: 108
Date: 10/8/2007
Time: 12:04:44 PM
User: SDG\gmurad
Computer: WIN2K3-MUF-2140
Description:
Failed to apply changes to software installation settings. Software
changes could not be applied. A previous log entry with details
should exist. The error was : Fatal error during installation.

For more information, see Help and Support Center at
http://go.microsoft.com/fwlink/events.asp.

Event Type: Error
Event Source: Userenv
Event Category: None
Event ID: 1085
Date: 10/8/2007
Time: 1:41:45 PM
User: NT AUTHORITY\SYSTEM
Computer: WIN2K3-MUF-2140
Description:
The Group Policy client-side extension Software Installation failed to
execute. Please look for any errors reported earlier by that
extension.

For more information, see Help and Support Center at
http://go.microsoft.com/fwlink/events.asp.

.

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